Latest news with #HomeBuildersInstitute
Forbes
20 hours ago
- Business
- Forbes
Building The Trades: We Can't Afford A $10 Billion Annual Housing Loss
Construction workers are in high demand as the country faces a severe affordable housing crisis. The United States and many other parts of the world are currently experiencing an affordable housing crisis. While there are many levers driving that crisis, one critical factor is a shortage of skilled trade workers. New research from the Home Builders Institute and the National Association of Home Builders (NAHB) revealed that the skilled labor shortage is causing an annual economic impact of $10.8 billion in the single-family home building sector. While home builders face higher material costs and more regulation that adds to time delays and extra costs, they also are scrambling to find skilled labor to start new home projects. The shortages mean fewer new homes are built, which means fewer homeowners are moving up, and fewer existing homes are becoming available to first time buyers as a more affordable option. Without having skilled labor, construction times are extended by an estimated two months. That extended construction time is responsible for the annual economic impact of $10.8 billion, which can be broken down into higher carrying costs and lost production. Extended construction times add up to $2.6 billion in direct costs, plus, it's estimated that in 2024, builders weren't able to build about 19,000 single family homes, representing a loss of $8.1 billion. Now, we need solutions. We need ways to fill that skilled labor gap that can help deliver the housing efficiently and effectively so that the costs are within reach of more Americans. Lowe's Chairman and CEO Marvin Ellison (left) and David Gitlin, Chairman and CEO at Carrier Global ... More Corporation discuss workforce development at Business Roundtable's event. The Business Roundtable, an association of CEOs of top U.S. companies, hosted a forum to discuss how large employers are creating new pathways for workers, including current best practices that expand opportunities in skilled trades and manufacturing roles. One of the main hurdles for these programs to be successful is the perception of these types of jobs. 'I grew up in a rural community in Tennessee and it wasn't uncommon that there was a vocational building next to a high school,' said Marvin Ellison, who serves as chairman and CEO at Lowe's. 'Many of my former classmates turned those into jobs, but then into careers and businesses. Sometime we started looking at that as less than.' Leadership at Lowe's saw that transition happening and decided to take responsibility for change by investing $50 million over five years to a training program to build skills and open the door to individuals wherever they choose to work. 'The construction trade has 500,000 open opportunities as we sit here,' Ellison said. 'There are 80,000 job openings for electricians per year, but they cannot find the skilled labor. AI is not going to fix a hole in your roof or stop a water heater from leaking. We'll always need skilled trades individuals so we started investing directly into vocational schools and organizations with a commitment in skilled trades.' The cultural shift goes well beyond no longer having vocational schools next to high schools. The school systems and their respective high school counselors that have the power to and the role of guiding students into careers and lifelong decisions have metrics based around college placements and therefore rarely point a student into the trades. 'There is a knowledge gap with guidance counselors,' said Calvin Butler, the president and CEO at utility company Exelon Corporation. 'They need to prompt students to consider careers outside of the traditional college path. Think beyond it and change lives.' This Business Roundtable session was moderated by Kevin O'Connor, skilled trades champion and the host of PBS's 'This Old House." Here he speaks with founder of Angi on the career opportunities in the trades. 'Demand in HVAC is doubling, but fewer folks are entering the field,' said David Gitlin, chairman and CEO at HVAC company Carrier Global Corporation. 'In just 10 years, we've gone from 1 of 3 going to a vocational school to 1 in 6. The amount of applicants is decreasing, and the availability of younger applicants is decreasing, and the demand is increasing.' He is leading Carrier to commit to making it a more attractive career by partnering with unions, and creating career advancements to give more upward mobility. The company is offering training, with a focus on the importance of how technology and virtual reality can assist the role, so participants get skills training, plus training in the digital realm. Sara Armbruster is the president and CEO at manufacturing company Steelcase and also said the ultimate need is to reframe views of careers in manufacturing that aren't always someone's first thought of what they want to do, help them see the possibilities which can be a life changing moment. New federal policies are changing the discussion for builders as well, with tariffs adding additional cost pressure and the deportation of immigrants reducing the available skilled worker pool for home builders. While the tariffs seem separate from the labor aspect, they are connected in several ways. A stable cost environment is needed to create a healthy supply chain, improve cost dynamics, and to maintain strong companies that can manage projects. 'Once the tax bill is passed, it will give people more opportunity to forecast costs,' said Peter Davoren, the chairman and CEO at Turner Construction Company. 'The U.S. has gone through modern day industrial revolution, and 90% of all materials for construction can come from the U.S. Eight years ago, one-third came from overseas, that's now at 10%. I think it will go up to 100% of all construction materials in the U.S. I believe we will be self-sufficient building with materials within the U.S.' He says that can happen by making the industry more welcoming. 'We need to provide all encompassing loyalty to employees and shareholders,' he said. 'There are so many workforce development programs providing the models for people to enter the industry, but not attracting them because of the perception of the industry." Finding workers in the short term might rely on immigration program reforms. Part of that could include a clear, efficient path for citizenship for people who seek work in the industry. Currently, immigrants account for 31% of all workers in construction trades, according to data from the U.S. Census Bureau. When I recently attended NAHB's spring leadership event, a lot of discussion was about how to approach this issue. There is passion around it, considering many builders are small business owners who are reliant on illegal immigrants to sustain their business. While they don't want to do something illegal, they also don't want their business to fail. Armbruster and the other CEOs at the Business Roundtable event hope for more certainty and stability from the government so they can guide their companies in better, more strategic decision making. Recently I was speaking with the editor at Rural Builder magazine who is writing about AI for his audience of 30,000 small builders in small U.S. markets. He spoke about a couple of his readers who have fairly manual processes and was frustrated by their reluctance to adopt technology that will help their business. Understandably, these are small business owners and any and all change is a risk, however, he recognizes that what these builders are doing with spreadsheets and hand drawings can be more accurate and much more efficient by using technology. The supply chain can certainly boost pro usage of technology. If the builder is buying lumber from a dealer that is using digital processes, the builder will need to also get up to speed. But, dealers are equally reluctant to adopt technology because of the large transformation and commitment it takes to do it. When companies do it though, there is a substantial pay off, said Blake Moret, the chairman and CEO at Rockwell Automation. His company has proven that technology offers the ability to be more efficient, and earn more profit. He also has been able to use that profit to expand into new lines of business. Dealers serving home builders could do the same, adding value in pivotal ways with efficiencies that will reduce costs and open the door to more affordable housing. As the nearly $11 billion in annual losses shows, we need solutions now. 'The need for speed cannot be underestimated or overstated,' said Julie Sweet, the chair and CEO at staffing company Accenture. She shared that the speed of transformation is possible. In November 2022, Accenture had only 30 people working on generative AI. Today, just two and a half years later, the company has more than 500,000 who have received AI fundamentals training, and more than 250,000 who have received advanced training, plus more than 70,000 are now deep data and AI specialists. She believes this is something that can be done, and it can be at speed, but it has to be done by thinking collectively. Small- and medium-sized enterprises have to buy in, which in the case of the Rural Builder audience can be a struggle, but it also is where the majority of economic activity happens. Keith Sonderling serves as the Deputy Secretary at the U.S. Department of Labor and is working on an executive order to set up one million apprenticeships every year. He emphasized the importance of technology in this process, in particular the adoption of AI. 'We have to train workers on how to use AI to make their lives better personally and at work and not worry about displacement,' he said. 'We have another executive order about AI literacy to understand how the next generation of workers can use AI. We need to start developing that AI curriculum to get it into classrooms as soon as possible. It really comes down to trust, adoption of AI is hard because there isn't trust.' The objectives are big and critical. The country needs 2.2 million new skilled construction workers over the next 3 years to start to meet what NAHB estimates at 1.5 million housing shortfall. Yet, optimism reigns. Manufacturers and service providers are investing in ways to lower costs for builders by using AI for its time saving advantages. And, we're all in this together. Even the folks in office jobs serving the home building industry have to take a role in building up the image of trade work, and it won't be easy. 'I truly believe the best is yet to come,' Davoren said. 'We have to get through the distractions. Go out and care for everyone you come into contact with and the strangers you don't come in contact with until you meet them for the first time. It's hard work. You might impact someone's life and they will model that behavior and impact someone else's life.'
Forbes
29-04-2025
- Business
- Forbes
Secret's Out: Trade Work Is Tomorrow's Career Jackpot
While home building and remodeling is hard work, it has many positive sides, including higher job ... More satisfaction and no college debt. Have you ever seen a home being built and noticed the trade workers? When I have a variety of things cross my mind, such as, that looks like hard work, what he's carrying looks heavy, that could be dangerous, they must be dying in the heat, or there is no laundry detergent for that… and, the list goes on. But what didn't cross my mind were some critical points—those pros are paid well, love their jobs, and could very well have better job satisfaction than I do here in my clean, temperature-controlled office. These are important points to highlight since the construction industry has more than 200,000 open jobs and needs 300,000 additional skilled workers annually to build just 100,000 more homes, according to the president of Home Builders Institute (HBI), Ed Brady. Misconceptions of trade work mean that fewer people are interested, and at the same time, turnover and retirements are shrinking the existing labor force. The trades are often seen as dirty, dangerous, dead-end jobs. This recent New York Times piece highlights some of the harsh realities along with the misperceptions. The defunding of high school shop classes was fueled by parents and counselors that want to keep students away from construction careers, even though there is strong earnings potential along with business ownership opportunities. Kevin O'Connor, host of HGTV's This Old House, is taking it on as his personal mission to get more young blood into the industry. 'There are millions of young men not looking for work, sitting on the sidelines,' he said. "There also are millions of underemployed college graduates dissatisfied with job prospects. So, maybe we have enough labor but it's just inaccessible to construction because of the industry's reputation problem." Much of the industry is now operating on an aging workforce that holds legacy knowledge, but they are ready to retire, and while they are ready to pass along their wealth of knowledge, no one is eagerly lining up to receive it. 'The desire to pass down skills and knowledge isn't the issue; the real challenge is finding someone to receive it,' O'Connor said. 'Without enough younger workers willing to step in, decades of experience risk being lost rather than transferred.' At the same time these labor shortages are peaking, we are in desperate need of housing and remodeling activity is rising. Data from the home improvement website Angi reports that 67% people said they would rather renovate than move, which is one reason remodeling activity is growing. 'We need to make sure we have a good quality pool of people who want to engage in the trades because the world of us not building new and caring for existing homes doesn't exist,' said Angie Hicks, founder at Angi. 'We need talented, skilled people to do that.' To underscore her point, a survey from Angi shows that there is not only plenty of opportunity in the trades, but a lot of upside. This 2024 survey was conducted online by and Pollfish of 800 Gen Z individuals--400 who are in the trades, and 400 400 with a college degree working in fields outside of the trades to explore how the two journeys compare. Ian Sears is president at Fig Tree Homes based in Sanger, TX, a path he followed after first getting a college degree. 'I love it, it's rewarding,' he said. 'I feel like I'm fulfilling my calling. My worst day at Fig Tree still far exceeds my best days in commercial construction in the rat race. I hear from friends who are working for 'the man' and they don't have that.' Just like any job, there are challenges, which should not be ignored, but Sears and his trade pro peers believe it's all worth it. For instance, there is the physical aspect of the job—it can be very physically demanding. 'Roofing a house is hard work, we shouldn't sugarcoat it,' Hicks admits. 'But, there are parts of every job that aren't great.' Yet all the negatives of trade work seem to be balanced with a strong sense of accomplishment, workmanship, and the pride in a job done well. Trade workers report more job fulfillment than their college educated peers in other fields ... More according to a recent Angi survey of both. The Angi survey shared that one-third of Gen Z pros always feel a sense of accomplishment from their work, compared to 24% of college grads. That sense of accomplishment comes from the tangible, hands-on nature of trade work, which most desk jobs can't offer. The survey results also showed that 70% of trade pros were excited to take on and enjoyed daily tasks, compared to 66% of those in other fields. Plus, while any number would be too high, only 21% of Gen Z trade pros report negative impacts to mental health from their job, compared to 37% of college graduates. This underscores the shift in how career success is now being defined by younger generations, who tend to focus on flexibility, autonomy, and job satisfaction instead of college degrees and moving up the ladder. Trade pros are more likely to recommend a career path in the trades versus their peers in other ... More fields. Most people in the trades have an entrepreneurial spirit and have become business owners, which is one of the most attractive aspects of being in the trades. Sears meets that profile. He said he always had an entrepreneurial spirit, and started his first landscaping business at age 14, and later starting his own home building company just like his dad. 'My dad was a business owner as well, which takes more than construction knowledge and ability,' he said. 'You have to have a business sense to embrace and understand how to make it all work.' With the responsibilities of owning a business comes great freedom too, which contributes to the high job satisfaction scores. According to Angi's survey, 74% of Gen Z trade pros feel the freedom to choose projects, but only 67% of college graduates feel they can exercise that same freedom. The survey also found that 74% of Gen Z trade pros feel autonomous in their roles, compared to just 67% of their college-educated peers. While job satisfaction is great, the critical aspect of any job is to make a living, to pay for food, shelter, and all of life's necessities. In most cases, trade work means earning money sooner because it doesn't require a college degree, so college debt isn't already piled up when the work starts. 'We live in a society of instant gratification,' Sears said. 'For me, I came out of four years of college with what I thought was worth something, and started making a small salary. Now, kids come out of college and want an instant return. We need to show the potential trajectory, where you start and where you can head with salary. Not make the trades look glamorous, because it's not, but kids don't understand the potential.' The Angi survey speaks to that potential. For example, 70% of Gen Z trade professionals believe their job provides enough income to support their lifestyle, higher than the 62% of college grads who feel the same. While there is a common perception that trade work doesn't pay as well, many trade pros earn competitive salaries and avoid the downsides of other careers. The trade path allows young people to start earning earlier, avoid student loans, and achieve financial independence sooner even when there is a degree involved. Only 47% of Gen Z pros with student loans expect to be paying them off for more than three years. In contrast, 54% of college grads anticipate a longer financial burden. 'In society, we have become so fixated on going to college—we even made high school about the college acceptance rate,' Hicks said. 'We need to look at the success rate, not college acceptance.' O'Connor is presenting to schools around the country to rebalance priorities, showing students that all work is valuable, regardless of the color of the collar. 'For every dollar this country spends supporting apprenticeship programs, it spends a thousand dollars supporting higher education,' he said. 'Is it any surprise young people flock to college and shun the trades? Or that as a country we overvalue a four-year degree and undervalue a two-year apprenticeship? Higher education is great, but so are skills and careers in the trades.' Hicks points out that getting exposed to trades at a young age historically was important, but many pros join later in life now to pursue a long held dream. Which is exactly what an Angi council member did--he had a corporate job, renovated his house and decided to start a new career in the trades as his second act. 'He told me that his only regret is that he didn't do it sooner,' Hicks said. "We need to capture those with a passion for the industry and help them choose the trades earlier. It's about exposure and understanding." This will not be a light lift. 'These are problems a generation in the making, and it will take decades to reverse course,' O'Connor said. 'For fifty years the country pursued a college-first approach to public policy, which was well intentioned but overshot its mark and left us with a severe skills gap.' As new technology enters into the field, it's reducing the pressures on the worker shortage and making the current work less taxing. Sears uses the online construction project management platform Buildxact to manage his business, making it easier to be a small business owner and helping him be more efficient with operations. 'If we can get one master plumber to do more work because he has better tools and technology, it can help fill the gap that we used to have to fill completely with labor,' Hicks said. 'We have watched how technology has played a role in the mechanics of a home, shifting to much more computer-based versus mechanical in the evolution of home systems. It opens a new segment of people that can enter the trades – there is need for programmers, computer science engineers, that can all help balance the demand for labor.' O'Connor is advocating to make the work less physical and more mental. 'We should embrace technology at all levels,' he said. "Construction lags agricultural, manufacturing, retail, and the broader economy when it comes to productivity growth by wide margins. Construction is dominated by small companies overly reliant on building by hand, piece by piece, and on site. This reduces productivity, stifles innovation, and inhibits talent recruitment." He also says technology is and will be the key to bring more young blood into the industry. 'On survey after survey young people ask for more exposure to technology and less exposure to hard, physical labor,' he said. 'They are also looking for professional advancement, mentorship, and skill building. Let's make the job site less about how much you can carry and more about how much you contribute.' Technology also can be a tool to integrate skill training into the job. 'Productivity, growth, and wealth creation are always the byproduct when work becomes more mental and less physical,' O'Connor said. Even though new tools are being introduced to the industry, the fact remains that homeowners have certain expectations. They expect contractors to be caring, understanding, and dependable. The relationship between the contractor and homeowner is important because their home is their largest investment. Pros need to be cognizant of that and use technologies and tools to communicate effectively and to create trust-based relationship. 'Whoever drives the technology has to make sure it is done right, and it doesn't take away the human element,' Hicks added. 'The Federal Policy Opportunities to Expand Housing Supply' report from HousingTech, Housing Innovation Alliance and the George Washington University Center for Real Estate Studies, offered ways that the government can support future development of the trades with insights from HBI's Brady; Branka Minic, the CEO at Building Talent Foundation; and Laura Arce, senior vice president at UnidosUS. As mentioned above, a renovation of the perception of trade work is a start, and could be supported by federal programs, such as an increase in funding for Job Corps and Perkins Grants. Brady suggested giving Community Reinvestment Act credit for corporate investments in training and workforce development—not just physical development. The government also could create tax credits or homeownership incentives for those involved in the trades. Minic proposed a 'trade loan' or VA-style benefit for workers who spend a set number of years in construction, rewarding them with favorable mortgage access. Everyone on the panel agreed that there is an opportunity to incentivize career and technical education enrollment and expand those programs. The government also could incentivize school counselors to direct students toward construction careers on par with college pathways. 'The death of shop class was the moment that hurt recruiting,' Hicks added. 'We need to reinvent what that is with programming that allows you to get exposed to the trades early in life. And also encourage exploration of jobs in the summertime when young people need work. Apprenticeships in and of themselves are great because you can learn on the job and it's something you can take anywhere.' Immigration remains important to the trades and Arce says policymakers should support immigration reform, such as the Dignity Act, to fill workforce shortages. She also encourages sustainable funding for training programs for underserved populations that not only boost labor supply, but also promote equity. Many federal administration policies are stunting the homebuilding industry that is dependent on a steady stream of trade workers. Today's market conditions and escalating college costs may open more minds to trade opportunities that also can offer a better way of life.
